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Blast at Yancheng Jiangsu chemical plant seen to spur safety checks across China

Energy Transition

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Blast at Yancheng Jiangsu chemical plant seen to spur safety checks across China

Singapore — China is expected to intensify safety checks at petrochemical plants across the country following an explosion at Yancheng Jiangsu's plant that killed 47 people Thursday, China-based industry sources said Friday.

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The plant in Eastern China's Jiangsu province produces variations of phenylenediamine, including p-phenylenediamine, m-phenylenediamine, and o-phenylenediamine. It is situated in the Chenjiagang Chemical Industrial Zone in Yancheng, Jiangsu -- one of the main petrochemical hubs in China.

While there was talk that plants in the zone may have to stop operations to comply with the checks, this could not be confirmed with authorities Friday.

"There are lots of petrochemical producers in the Jiangsu area. Some market participants are worried that the explosion will lead to a major investigation of [petrochemical] plants in the area," a South Korea-based producer said Friday.

A propylene producer in the neighbouring province of Zhejiang said that the government is likely to step up safety checks on other petrochemical plants across the country.

"Safety officials from the Zhejiang local government are coming to our plant to inspect tomorrow," said the propylene producer.

If more plants had to eventually shut down because they failed to meet the safety standards, it could push up prices of some petrochemical products, the producer added.

One of the feedstock the Yancheng plant uses is aniline -- a downstream product of benzene and ammonia. However, benzene market participants said that the explosion was unlikely to have a noticeable impact on demand for benzene.

Asia benzene was assessed on Thursday at $633/mt FOB Korea, up $7/mt day on day, S&P Global Platts data showed.

A major methanol producer based in Singapore said: "China may be interesting after the explosion yesterday. Usually we see tighter regulations with hazardous operations."

His plant supplied more than 50% of the methanol imported into China in 2018, the producer said.

--Staff, newsdesk@spglobal.com

--Edited by Haripriya Banerjee, haripriya.banerjee@spglobal.com